Net Revenue: $11.2 billion, up 6% year on year, down 1% quarter on quarter. Adjusted EBITDA: $3.3 billion, up 16% year on year, up 2% quarter on quarter. Total GGR: $10.9 billion, up 14% year on year. Visitor Arrivals in Macau: 9.9 million, up 11% year on year, up 9% quarter on quarter. Macau's GGR: $56 billion, up 1% year on year, flat quarter on quarter. Electronic Gaming Volume at StarWorld: Increased by 57% year on year. Dividend Payout Ratio: Increased to 50%. Final Dividend: $0.50 per share, to be paid in June. Total Cash and Liquid Investments: $33 billion as of quarter one. Net Cash: HKD29 billion. Workforce: Approximately 21,000 employees, similar to 2019 levels. Staff Cost: Accounts for about 79% of fixed operating costs. Total Capital Spend: Around $900 million for quarter one. Investment in Phase 3 and 4: Cumulative investment of $33.4 billion. Expected Total CapEx for 2025: Approximately $7 billion. Galaxy Macau Foot Traffic: Increased by 64% year on year.

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Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Visitor arrivals in Macau grew 11% year-on-year and 9% quarter-to-quarter, reaching 9.9 million. Galaxy Entertainment Group Ltd (GXYEF) posted net revenue of $11.2 billion, up 6% year-on-year. Group adjusted EBITDA increased by 16% year-on-year and 2% quarter-on-quarter, demonstrating strong cost control and positive operating leverage. Galaxy Macau's property mass GGR reached 113% of 2019 levels, indicating strong performance. The company increased its dividend payout ratio to 50%, reflecting a commitment to returning capital to shareholders.

Negative Points

The global trade disputes and slowing global economy pose challenges and uncertainty, impacting consumer sentiment. Net revenue was down 1% quarter-on-quarter, indicating some short-term challenges. Labor costs remain high, accounting for about 79% of fixed operating costs, which could pressure margins. The company anticipates a potential weakening of demand in the short-term due to macroeconomic conditions. The entertainment segment alone is still making a negative EBITDA contribution, despite synergies with gaming.

Q & A Highlights

Q: Can you explain the impact of the mass hold rate drop on EBITDA and whether the hold rate has stabilized? A: Ted Chan, Chief Financial Officer, explained that the mass hold rate was lower in Q1 compared to the second half of last year. If normalized to last year's average, EBITDA would have improved by approximately $300 million. The hold rate has started reverting to previous levels in Q2, and the VIP segment is also normalizing, with a win rate close to the expected 3.1%.

Story Continues

Q: How did Galaxy perform during the Golden Week, and what factors contributed to the demand recovery? A: Ted Chan noted that Galaxy outperformed the market with a 12% year-on-year growth during Golden Week, driven by solid volume and favorable VIP segment performance. Foot traffic at Galaxy Macau doubled compared to last year, and retail sales saw a high double-digit increase, indicating strong demand recovery.

Q: What is the outlook for operating expenses, and will Capella's opening affect them? A: Ted Chan stated that operating expenses were down 5% quarter-on-quarter and 7% year-on-year, primarily due to effective cost control, especially in staffing. The opening of Capella is not expected to significantly increase costs due to economies of scale, and the company aims to maintain current expense levels.

Q: What is the status of Capella's opening, and how is it expected to ramp up? A: Ted Chan mentioned that most rooms and the gaming floor at Capella are open, with full operations expected within six months. The property targets ultra-high-value customers, and the ramp-up is anticipated to be quicker than previous projects like Raffles.

Q: How is Galaxy addressing competition and potential international expansion opportunities? A: Ted Chan highlighted that Galaxy did not increase rewards during Golden Week yet improved market share, indicating stable competition. For international expansion, Galaxy is interested in opportunities in Thailand and is open to revisiting Japan, contingent on favorable regulatory conditions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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